51770
noTE no. 50 ­ Aug. 2009
GRIDLINES
Sharing knowledge, experiences, and innovations in public-private partnerships in infrastructure
Partnering for water in Côte d'Ivoire
Lessons from 50 years of successful private operation
Philippe Marin, Eustache Ouayoro, Matar Fall, and Richard Verspyck
T
he public-private partnership (PPP) for and with a single, nationwide tariff to allow cross-
the national water utility of Côte d'Ivoire subsidization between Abidjan and smaller cen-
is the oldest and largest water PPP in ters. Finally, SODECI's mandate was expanded.
the developing world. In place since 1960 and At a time when several other West African coun-
today serving more than 7 million people, this tries were nationalizing their water utilities, Côte
PPP has provided quality service for decades d'Ivoire granted SODECI a nationwide affermage
and made remarkable progress in expanding contract giving it responsibility for operating all
access in the 1990s. It even proved resilient water supply systems in the country.
to civil strife and the de facto partition of the
country in 2002. This African success story The reform led to major advances in the water
shows that a pragmatic partnership between a sector nationwide. These were Côte d'Ivoire's
committed government and an efficient private "golden years," with rapid economic growth, and
operator can produce tangible and sustained the government invested about $400 million in
benefits for the population. water supply infrastructure through FNH. The
share of households with access to safe water
The public-private partnership for water services doubled to 63 percent in 1983, and piped water
in Côte d'Ivoire had its start in 1959, the year networks were installed in almost 200 towns.
before the country's independence. The munici- At the same time the private operator achieved
pality of Abidjan awarded a concession contract to good levels of operational efficiency. The share of
a French private operator for the operation of the nonrevenue water, for example, was less than 15
water services in the city, which then had a popu- percent nationwide, comparable to the levels of
lation of 160,000. The operator, incorporated as well-managed water utilities in Western Europe.
an Ivorian company under the name SODECI, The company's management was gradually trans-
began operation in 1960, taking over a system ferred to Ivorian nationals, and in 1978, 48 per-
with fewer than 4,000 connections. At that time cent of the shares were sold to national investors
water services in the country were the responsi- through an initial public offering on the Abidjan
bility of municipal governments, and SODECI stock exchange.
gradually expanded into 10 other cities by signing
contracts with the local authorities.
Moving to a hybrid scheme
In 1974 the central government carried out a
major reform of the water sector. Local govern- By the late 1980s the country's water sector was
ments had lacked the resources and capacity to in a very different situation than those of neigh-
PPIAF Approved Logo Usage boring countries. A competent operator was in
expand the infrastructure. Nationally, only 34 per-
cent of households had access to piped water, and
lacked
many townsLogo - Black a water system. The reform
shifted responsibility for water services back to Philippe Marin is a senior water and sanitation specialist in
the central government. A national water fund the World Bank's Energy, Transport, and Water Department.
(Fond National de l'Hydraulique, or FNH) was
PUBLIC-PRIVATE INFRASTRUCTURE ADVISORY FACILITY Eustache Ouayoro is water sector manager, and Matar Fall
established to support major public investment is a lead water and sanitation specialist, in the World Bank's
in infrastructure. A new tariff policy was put into Africa Region. Richard Verspyck is a consultant to the World
place, following the principle of full cost recovery Bank.
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through public-private partnerships in infrastructure
2
place, the infrastructure was being properly oper- residential customers, though there were recur-
ated and maintained, and customers with connec- rent problems in collecting bills from government
tions were receiving good service. Yet a large share agencies.
of the urban population still lacked access to piped
water, and rapid population growth in urban areas The most notable achievement was the expan-
was generating strong demand for more house- sion of access to piped water (figure 1). Between
hold connections. Moreover, the sector's financial 1988 and 2001 active water connections grew
health was under strain, with revenues too low to from 213,000 to about 500,000--a net increase
cover ballooning debt service. The investment pro- of almost 290,000.1 Most new household con-
gram managed by FNH had gone out of control, nections were installed under the FDE social con-
and many new projects proved to be unnecessary nection program, which allowed households to
or designed with large overcapacity. obtain a small-diameter connection at no charge
in exchange for a refundable deposit of about $35.
To reestablish financial sustainability, the govern- The estimated number of people served through
ment made two strategic decisions. First, new household connections more than doubled, increas-
investment would be clearly linked to operational ing from about 2 million to 4.3 million, and the
needs. Second, infrastructure development would share of households with connections rose from
focus on network expansion for years to come, to 39 percent to 63 percent. Including households
make use of the existing overcapacity and satisfy served by standpipes and other schemes, the total
the growing demand from a booming population. population served by SODECI about doubled, to
more than 6 million, and the share of households
These decisions were reflected in a new PPP con- with access to safe water rose from 65 percent to
tract negotiated with SODECI and made effective about 90 percent.
in 1988. A new water development fund (Fonds
de Développement de l'Eau, or FDE) was estab- This rapid expansion was achieved without govern-
lished, to be managed by SODECI. The FDE ment funding. Almost all the investment in this
would finance network extension and subsidized period (about $150 million) was funded from cus-
household connections under a social connection tomer revenues. A virtuous circle was established
program. The FDE was to be funded not through in which growth in the customer base translated
government borrowing but through a tariff sur- into growth in water billed (from about 80 million
charge paid by connected customers. cubic meters in 1988 to 120 million in 2001) and
The PPP sales revenues. This, along with the efficiency gains,
became This new arrangement made the PPP a hybrid
between an affermage and a concession. The pri-
allowed the sector to become entirely self-financed.
Moreover, "regulation by contract," with a dedi-
a hybrid: vate operator was directly responsible for deciding cated government unit supervising the PPP con-
part on investments and executing them, much as a
concessionaire would be. But because the FDE
tract, proved effective in ensuring that efficiency
gains were passed on to customers; the average
affermage, was funded by revenues collected from customers, tariff fell in real terms during the period.
part the operator did not bear the associated financial
risks. SODECI's responsibilities expanded further in
concession 1999, with the signing of a separate 16-year affer-
mage contract to operate Abidjan's sewerage sys-
Rapid expansion in the 1990s tem and its two wastewater treatment plants.
During the 1990s SODECI sustained its good
operational performance and even improved on Resilient despite turmoil
several key indicators. While the share of non-
revenue water remained in the 14­18 percent Since 2002 SODECI has faced exceptional cir-
range, water losses per connection were further cumstances as the de facto partition of the coun-
reduced between 1988 and 2001, from 0.18 cubic try between government- and rebel-held areas led
meters a day to 0.13. Labor productivity improved to unprecedented operational and financial chal-
significantly, with the number of staff per thou- lenges. The share of nonrevenue water has risen
sand connections dropping from 6.2 to 3.0, even from 18 percent to 23 percent, and losses per con-
though there were no layoffs and the total number nection have returned to the pre-1988 level (0.19
of employees rose from 1,320 to 1,600. The bill cubic meters a day, still good by regional standards).
collection rate remained at about 98 percent for Problems of service interruption have started to
Partnering for water in Côte d'Ivoire
3
FI g uRe 1
Access to safe water expanded rapidly in the 1990s
Water connections and coverage in Côte d'Ivoire, 1990­2006
600 100
90
500
The private
80
70
Connections (thousands)
400
60
operator
Coverage (%)
300 50
maintained
40 good service
200
30 despite the
100
20 turmoil
10
0 0
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Nonsubsidized connections Social connections
Households with access to safe water Households with connections
Sources: SODECI; authors' calculations.
appear in Abidjan and other cities. No further most production facilities have now reached full
gains have been made in labor productivity. Not capacity, and a key challenge will be to finance new
surprisingly, the expansion of access has slowed. water treatment facilities while also rehabilitating
The number of active connections has continued an aging network and providing further extensions.
to grow but at a slower pace, reaching 554,000 This will require a revision of the PPP's financial
by the end of 2006. In contrast with the previous arrangements, with the government probably hav-
decade, subsidized connections accounted for only ing to provide financial support for the next invest-
about a third of new ones. No progress has been ment program.
made in the coverage rate.
Yet SODECI was able to maintain good service by Lessons learned
regional standards despite a challenging environ-
One striking feature of Côte d'Ivoire's water PPP
ment. That SODECI had come to be perceived as is its pragmatism. This long partnership evolved
an Ivorian company and was appreciated by the over time, adapting to changing government pri-
population helped sustain the PPP during these orities. It proved surprisingly resilient during a
troubled years. Both the government and donors major national crisis, at a time that several large
provided financial relief. In 2002 the central gov- water PPPs elsewhere in the developing world were
ernment allowed the operator to use part of the terminated. Although the PPP is usually referred
FDE's proceeds to compensate for unpaid bills to as an affermage, it is in reality a hybrid scheme,
of public agencies. And the European Union pro- designed by the government to suit its needs, that
vided grants to maintain water services in rebel- also includes elements of a concession. Such a
held areas. long, successful partnership offers valuable lessons
for policy makers:
Today SODECI serves more than 7 million people
(nearly 5 million through household connections), ·The objectives of the 1988 reform have been
making it the largest water PPP in the develop- largely achieved: developing access through
ing world.2 With the recent return to normalcy household connections and restoring the sec-
in Côte d'Ivoire, the water sector is now poised tor's financial sustainability. The government's
for a new phase of development. Because of the assumptions proved to be correct: that the
rapid network expansion of the past 15 years, private operator could carry out the network
4
expansion program efficiently and that expand- on irregular wages have had difficulties paying
ing access would lead to greater revenue flow regular monthly bills. This as well as more recent
from customers and thus to gradual improve- experiences in neighboring countries (notably in
ment in the sector's financial situation. Senegal) suggests that household connections
might not always be the best option for provid-
·While the financial arrangement--based on ing access to safe water to the poorest part of the
financing all investments through customer urban population in developing countries.
tariffs--has been remarkably successful, it is
not necessarily replicable elsewhere. The Côte ·One key to the sustainability of the PPP has
d'Ivoire water sector had exceptional conditions: probably been the private operator's promo-
the large overcapacity in production in the early tion of local management. This underscores the
1990s and well-maintained and efficiently oper- importance of foreign operators transferring
ated infrastructure. The model, successful in their expertise to local staff on a large scale if
expanding access in the 1990s, has now reached they want to be accepted as long-term partners.
its limits, and the government will probably It also shows that an African water utility, run
need to start providing public funding for future by Africans, can perform as well as the most effi-
investments. cient water utilities in Western Europe or North
America.
·Thepresenceofawell-performingprivateopera-
tor was a key to the success of the reform. Effi- Notes
cient operation, good service, and a commercial 1. To put this figure into perspective, over a decade the private
concessionaire in Buenos Aires installed about 310,000 new
approach helped create a virtuous circle that connections, and in Manila the two concessionaires installed
allowed the sector to gradually become finan- respectively about 230,000 in West Manila and 250,000 in East
cially sustainable. Manila.
2. Manila has the largest water PPP, with 12 million people, but it
·The expansion in access to piped water was involves two concessions with separate contracts. The other largest
ones are those for the utilities in Selangor State and Kuala Lumpur
achieved largely thanks to the subsidized con- in Malaysia (6.6 million), Santiago in Chile (5.5 million), and
nection program. As the customer base and Senegal (4.7 million).
sector revenues gradually increased, so did the References
share of the tariff that could go to support the Estache, Antonio, and Eugene Kouassi. 2002. "Sector Organization,
investment program. Even in a poor developing Governance, and the Inefficiency of African Water Utilities." Policy
country, expanding access and achieving finan- Research Working Paper 2890, World Bank, Washington, DC.
cial viability are complementary (not contradic- Fall, Matar, Philippe Marin, Alain Locussol, and Richard Verspyck.
2009. "Reforming Urban Water Utilities in Western and Central
tory) objectives--as long as an efficient operator Africa: Experiences with Public-Private Partnerships." Vol. 2, "Case
is in place. Studies." Water Sector Board Discussion Paper Series, World Bank,
Washington, DC.
·Côted'Ivoirewasthefirstintheregiontopro- Marin, Philippe. 2009. Public-Private Partnerships for Urban Water
mote subsidized water connections on a large Utilities: A Review of Experiences in Developing Countries. Trends and
Policy Options Series, no. 8. Washington, DC: World Bank and
scale. While this was largely successful, the dis- PPIAF.
connection rate has been significant, reaching PPIAF and World Bank. 2006. Approaches to Private Participation in
about 15 percent by 2002. Poor families living Water Services: A Toolkit. Washington, DC: World Bank.
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